Merrill Lynch decided to get this shortened week off with some positive momentum, and if you can't sense the sarcasm in my writing; let me tell you that was said with tongue firmly planted in cheek. The brokerage decided to cut earnings estimates on a dozen of the 15 services stocks that it covers. The reason for this whacking with the downgrade stick was that Merrill Lynch believes that there is a 65% chance of a recession in the United States. The broker also noted, our revised estimates still imply EPS growth across the board, implying further downside to estimates should a recession unfold.

Among the companies feeling the wrath of Merrill were FTI Consulting (FCN), which was cut to sell from neutral; the aptly named Heidrick & Struggles (HSII) was cut to sell from buy; Korn Ferry (KFY) was cut to neutral from sell; and Manpower (MAN) was slashed to neutral from buy. Looking at how these companies are doing in early trading: FCN has shed 2.8%, HSII has slipped more than 7%, KFY has lost nearly 5%, and MAN has lost more than 3.5%.

Not all the action from Merrill was negative. In fact, Kelly Services (KELYA) and Iron Mountain (IRM) were upgraded. KELYA was elevated to neutral from sell and IRM was upped to buy from neutral.